Buying a home, whether it’s your first house or third investment property, involves many moving pieces to ensure a smooth purchase. Our list of home buying FAQs answers some common questions we get from clients.
How do I know if I’m ready to buy my first home?
Thinking it might be time to make a move from renter to homeowner? These signs can mean it’s time to buy your first house:
- You have an idea of how the next 5 years will look and are ready to stay in one area
- Your current living situation no longer fits your needs
- You have saved for a down payment and are in a comfortable financial situation
Read more about your first home on our blog: Buying Your First Home – How to Know You’re Ready
What is the process for buying my first home?
Buying your first home is an exciting time – but it can seem overwhelming to look at the big picture and all the moving pieces. Taking a step back and breaking down the process into smaller tasks can help put things into perspective. (And remember, there are many professionals on your side to help you navigate!)
While it may differ for some, the basic process for buying your first home will probably involve the following steps:
- Head to the bank – know your numbers and create a plan for the next steps.
- Save for your down payment.
- Get a mortgage pre-approval.
- Define your boundaries and pinpoint an area/city/neighbourhood.
- Find a real estate agent familiar with the area you want to buy in.
- Create your list of needs and wants.
- Start searching for your first home.
- Schedule showings.
- Place an offer.
- Firm up details and close on your new home!
Are there government programs in Canada to help First time home buyers?
There are various programs to support first-time home buyers.
- The HomeBuyers Program allows first-time buyers to withdraw up to $35,000 tax-free from their RRSP to use as a down payment. (You have 15 years to return the money to your RRSP).
- The Land Transfer Tax Refund provides a refund of up to $2,000 on the Ontario Land Transfer Tax.
- The First Time Home Buyer Tax Credit provides up to $750 for closing-related costs for first-time buyers. (This amount may soon increase to $1,500 based on the proposed Federal budget, we’ll keep you posted!)
Eligibility and amounts for these programs can switch over time, so check the Canadian Government website for updates.
What deposit do I need to purchase a home in Ontario?
First-time home buyers in Canada generally require a minimum of 5% of the purchase price as a down payment. Lenders with less than 20% as a down payment will require mortgage insurance through a company such as Canada Mortgage and Housing Corporation (CMHC) or Sagen Canada.
Should I buy resale or preconstruction?
Whether to buy resale or preconstruction will vary and depends on your priorities. Each has pros and cons, depending on your situation, lifestyle, needs, and wants.
There are many pros of buying resale homes. Resale homes are generally less expensive than preconstruction, with room to navigate the price. You also know the dynamics of the neighbourhood and how close you are to amenities. There is also the potential for tax savings, as resale homes tend to have a lower tax profile.
Preconstruction means you have new everything, with room for customization and active warranties for fewer repairs in the first few years. That also means the latest technology for energy efficiency. And you may be able to get financing through the builder, which could make it easier to qualify for a mortgage.
Read more on our blog: Resale or Preconstruction: Which is Right for You?
What is the average number of days for closing?
When purchasing a home, the buyer and seller will agree on when they want to close, so there isn’t a set time limit that applies to everyone. We usually see closing dates in the 30–90-day range, but it can vary anywhere from 2 weeks to a year.
How do I prioritize what I want in a house?
- What do you NEED in a house? A NEED is a deal-breaker – if the property doesn’t fit this need, it’s not the home for you.
- What do you WANT in a house? A WANT is something that would be nice but isn’t a necessity.
It’s a subtle difference but an important one. And it’s best to be as straightforward as possible about your priorities before you start searching.
One of the best ways to define your list of wants and needs in a new home is to work backwards. Start by writing down absolutely everything you want – what would your dream home look like? Then go through your list and rank your priorities.
Read more about creating your checklist on our blog: How to Create Your Home Buyers Checklist
Should I talk with a bank before looking at homes?
Heading to the bank first to get pre-approved should be a first step in buying a home. You’ll get a clear picture of how much you can afford, so you won’t waste time looking out of your price range. You’ll also be able to ask about any programs available to you and clarify any questions about your mortgage. A mortgage broker is also a great help in getting a pre-approval. We have some fantastic mortgage brokers that we work with often, reach out if you’d like their contact information.
What is the foreign buyer’s tax, and who does it affect?
The foreign buyer’s tax applies to foreign nationals purchasing homes in Canada (anyone who is NOT a Canadian citizen or permanent resident). This increased tax was created in response to housing problems in the country to help prioritize the purchase of homes for Canadian citizens.
Read more about foreign buyer’s tax on our blog: Ontario Foreign Buyers Tax: Everything You Need to Know
Buying a home will be one of the most significant purchases you make in your lifetime. We hope this list of home buying FAQs gives you some of the answers you need!
Be sure to do your homework and get qualified experts on your side to help you navigate. And if you have any further questions, we’re happy to chat about real estate.